Congressman Tony Hall’s Speech at the World Diamond Congress

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The following is the full text of Congressman Tony Hall’s (D-Ohio) speech to the World Diamond Congress in Antwerp, on July 17, 2000:

Thank you for inviting me to join you at the opening of what I hope will be remembered as an historic World Diamond Congress. I particularly want to express my appreciation to the New York Diamond Dealers Club for facilitating this invitation.

I am heartened that you are focusing your first session this week on the troubling issue of conflict diamonds, and I wish you the best in devising a real solution to the terrible problems they have created in Africa.

I have had the pleasure of getting to know some members of your industry over the past 18 months and am encouraged to find it dominated by honorable people.

The Task at Hand

I am sure that, if you — personally and collectively – set your minds to the work at hand, peace finally will come to millions of people in Africa who are now suffering. As I see it, this task has two parts.

– The first is substantive: severing the link between diamonds and war. Success in this will turn on your expertise and commitment.

– The second is more ticklish: fulfilling the industry’s responsibility to the African people whose resources have made it wealthy – and persuading a newly activist group of consumers and advocates that you are doing right by Africans.

This will be difficult because, as the situation in Sierra Leone now stands, “a new observer to the scene can hardly imagine how such exploitation can exist in the 21st century.” And things aren’t significantly better in Angola, the Democratic Republic of Congo, or Liberia.

My Visits to Sierra Leone

I first visited Sierra Leone 10 years ago, and thought the situation couldn’t get much worse. I was wrong.

A decade ago, I found a nation that should be one of Africa’s richest. It is blessed with good soil and climate, delightful people, and tremendous minerals — and because its history gives it a special place in the hearts of Britons and Americans. But its leaders were thoroughly corrupt then, and its people were shockingly poor. In hindsight, it is now clear that Sierra Leone was a disaster waiting to happen.

I returned last December, after that disaster struck, with a champion of human rights – Congressman Frank Wolf, a Republican member from Virginia. We found the situation had gotten unspeakably worse. We saw toddlers whose arms were chopped off with a machete; adults who had lost a nose, or an ear, or hands, or legs. We saw a 13-year-old who had lost both her forearms – and was 7 months pregnant with a rebel’s child. In a culture of subsistence farmers, it is very hard to see a future for these victims.

Of course, we did not see countless people who had bled to death because, after their hands were chopped off, they were ordered to run to the next village. These “ordinary” victims got death sentences for voting in this small country’s first election from rebels. Why? As a sick way of twisting the winning slogan — “give us a hand” to help the country – into revenge for their losses at the polls.

I don’t want to dwell on this grim situation, but it is worth remembering Sierra Leone because many of its people continue to suffer. The fighting has slowed, but not stopped, and experts believe rebels are merely regrouping for another attack. Child soldiers and girls used as sex slaves, who the rebels agreed to free a year ago, remain captive. Skirmishes still produce savagery: last week, rebels cut out the heart of a government soldier they captured. Because so many of these killers grew into adolescence without their families, and are kept high on drugs, it is hard to imagine they can easily change their ways, even after peace comes.

The victims of Sierra Leone’s war, and other wars like it, are the reason I am here today. These human beings forced me to look into the trade in conflict diamonds, and these people’s misery will motivate me to do everything I can to help.

Human Rights Campaign

It also will energize human rights activists, and a group of American organizations has asked me to present you with their plea for real solutions to these problems. It is a thoughtful effort supported by some of the world’s top advocates, and I hope the World Diamond Congress will listen to its contents in full during today’s meeting.

This is not my letter, but I have met with this campaign’s organizers – who are also leading the U.S. Campaign to Ban Landmines. I believe they will act responsibly; and I know they will not go away easily.

Sever Link between Diamonds and War

It has become clear, to outsiders and insiders alike, that the diamond industry’s most pressing challenge is to sever the link between war and diamonds. Until that happens, some mines will remain a target for rebel attacks and the source of funds to expand their violence.

In Sierra Leone, rebels transformed themselves from a rag-tag bunch of 400, into a force 25,000 strong and formidably well-equipped, almost solely on the strength of the country’s diamonds. In Angola, rebels filled more than half of their war chest with proceeds from their diamond sales. The situation is less clear in the DRC – but the 1.7 million people who have died in the 23-month-old war there make whatever role diamonds are playing all the more serious.

I do not need to draw the comparison between fur and the luxury product you sell. . . or point to the “Battle for Seattle” and similar protests. . . or list the growing number of press reports about conflict diamonds. I trust you already have considered these factors — and determined to consider the task of stopping the trade in conflict diamonds is essential for your industry’s future viability. It certainly is critical for South Africa and other nations, and for the workers in India and other nations who depend on the legitimate trade.

There are many ways to go about stopping this blood trade, and many of them sound promising.

– I’ve heard the U.S. Customs proposal that rough diamonds be color-coded with a wax coating, and cutting centers be monitored to ensure certificates match the diamonds’ origin. Given that Americans account for 65 of the world’s demand for diamonds, I believe this approach deserves some consideration.

– I know of the model pioneered by Home Depot, the world’s largest seller of timber. It relies on internationally acclaimed human rights organizations to verify compliance with its voluntary ban on the trade in endangered hardwoods.

– I’ve seen Martin Rapaport’s bar codes and baggies idea, and see possibilities in that – particularly in the central database it would establish. I would like some assurance that a Security Council resolution alone would bind the World Trade Organization and World Customs Organization. And I would hesitate to reinvent a wheel that development professionals already have perfected, or focus on subsets instead of the population to whom these resources belong.

– I’ve also heard of the New York diamantaires’ ideas, including adherence to a strict set of operating principles.

– Finally, I believe that technology could help provide solutions. In the Persian Gulf, for examples, sanctions against Iraq permit inspectors to board ships and test whether oil they are transporting was pumped from Iraq or Iran. That is a remarkable technology, one whose creation was driven by market demand, and a hopeful example for technology of value to you.

It is already well within this industry’s existing capabilities to smell trouble in some parcels of diamonds. Global Witness’ recent report documents this ability using industry’s own statements, and it makes additional recommendations that deserve serious recommendations.

The bottom line is this: you are all smart people, and your industry is a remarkable one. I have the utmost confidence that — if you make solving this problem a priority — you can figure this out.

Potential Pitfalls

In finding solutions, though, I hope you will resist the temptation to stick with a “trust us” approach – independent verification will be essential to the credibility of any proposal.

– The substantive steps DeBeers has taken, for example, are encouraging – particularly if they signal a sincere and permanent commitment to squeeze those involved in diamond smuggling.

Accountability is the missing ingredient, though, and the cost of waiting so long to take this step probably will be consumers’ insistence that this system be transparent.

– DeBeers’ other steps – simply saying one day that none of its stones contributed to conflicts – may prove risky to the entire industry. It defies credibility that one week DeBeers says it is impossible to know where a diamond is from. . . and the next week it contradicts itself to say it can tell where a diamond is not from.

This P-R approach seems to open the entire industry up to any disgruntled trader or worker who wants to discredit it, or by activists who – if they could prove otherwise – would be heroes of the human rights community. My office has heard from all kinds of people since I began working on conflict diamonds, and some of them fit these descriptions.

As difficult as the present problems may be, they could get markedly worse if any part of the industry is perceived to have fudged on this.

Another potential pitfall is that the monopoly power that makes an effective certification system possible — also makes other industry players suspect if they try to perform their traditional watch-dog role.

Certification System is Necessary – but Not Sufficient

I believe all of these problems can be overcome, but backing them up with market-driven checks will be essential to a credible system. A certification system is necessary – but now that public scrutiny is on your industry, it probably won’t be sufficient.

My government does not want to regulate 850 million diamonds: it wants the suffering in Africa to end. Over the past decade, my country has invested $2 billion in food aid and bandages for the people in Sierra Leone, Angola, Liberia and the DRC. At the same time, $10 billion in conflict diamonds was smuggled out of these nations – and used to inflict suffering that will make even more relief necessary. We owe it to both American taxpayers and African citizens, to take wiser action.

Certifying diamonds is a means to that end. . . a way of giving responsible members of the industry a stake in peace. Marking a diamond “mined in Sierra Leone” buys its people an insurance policy – because it encourages industry to do whatever it can to make sure that disclosure doesn’t conjure images of butchery that might cast a shadow on a diamond’s value.

This certificate has become necessary because the usual incentives for peace haven’t applied to the diamond trade. War’s violence and instability is bad for most businesses – and so businessmen and organizations bring whatever pressure is necessary to bear on those who would wage war. They lean hard on criminals and rebels before peace unravels – and they very often succeed.

But war has been great for the diamond business – or at least irrelevant to it.

For eight years, no one has blinked at the enormous quantities of diamonds flowing out of Liberia – even though everyone knew those stones were mined in Sierra Leone by rebels who were butchering civilians, creating Africa’s biggest refugee community, and using the profits to violate the longstanding UN arms embargo and attack the democratically elected government. Likewise in Angola – where De Beers bragged about its power, and demonstrated it by “mopping up” rebels’ diamonds.

Of course, the job of preventing war does not belong to any one of us. But your industry has failed; my government has failed; others who could have done something have failed.

The reality in many places is a corrupt or impotent government – and when it abandons its responsibility, a heavier burden falls on everyone with a stake in peace. By a quirk of commerce, though, the diamond industry doesn’t have that stake. Certifying diamonds gives it one.

Second Challenge: Reparations and Investment

So how do you devise something beyond the regulatory solution? Having let the situation spiral out of control, you now need something that makes economic sense if you are to persuade consumers you are sincere.

Charity to atone for past injustices and fulfill your corporate responsibility to the people whose resources have been exploited may help improve your image – and is probably needed to avoid watching your product become a pariah. But you need more if you are to convince consumers that your generosity is not just guilt money, but a real investment in these regions.

The bad news is, I’m talking about real money. The good news is, a little goes a long way in Africa.

Charitable Donation — One Percent of Profits

I would encourage you to invest first in the relief that is so desperately needed. If I were you, I would contribute to UNICEF’s projects and to refugee aid. I would buy books, build clinics, and help with food and medicine.

And I would support the work Doctors Without Borders — this year’s Nobel laureate — is doing at the amputee camp in Freetown.

I don’t underestimate how difficult it will be to help in this direct way, or how tempting it will be for observers to see donations for prosthetics as acceptance of responsibility for victims’ fates. But – given that rebels likely will use the war chests your industry filled in ways that make the evening news – I don’t think you can duck this. I will promise you that, if your contribution to easing amputees’ suffering and help meet other humanitarian needs is significant, I’ll stand behind you in taking this difficult step.

So the question is, how much? It’s hard for an outsider to calculate a suitable level of corporate giving – even leaving out decades of neglect and exploitation of Africa.

One world-class company, without similar baggage or the tremendous profits your industry enjoys, has settled on an annual goal of one percent of its profits in one of its field operations. That seems a reasonable level – and works out to $60 million per year to be spent in Africa.

Donation – Amount Equivalent to Taxes (3%)

Alternatively, I believe you have an obligation to pay the taxes that would be collected if rebels were not in charge. According to US-AID, that is about 3 percent of the value of diamonds. . . by my calculation, that also works out to $60 million.

Frankly, I don’t see any alternative to that $60 million. How can the industry say it will support a certification system – and then continue to pay this 3 percent bonus for smuggled diamonds, especially when it goes right to butchers? No system could be viable with economics like that undercutting it, and it certainly won’t be credible.

Until the governments of these countries collect taxes on their diamond wealth, they can’t build the schools and pay for clinics, food, and other humanitarian items. By contributing to this work, the diamond industry could take care of these needs with the same money – and at the same time demonstrate it is serious about making a certification system work.

Reparations?

As for the past, I don’t know what to suggest. In recent years, we have seen a righting of old wrongs committed against workers at companies that were part of the Nazi war machine. There is a growing realization that nations, businesses, and churches, bear some responsibility for actions that did serious damage to African-Americans, to famine victims, and others.

One way of grappling with this may be to hire a director of corporate responsibility – someone who will genuinely examine this and other issues that are increasingly the focus of human rights campaigners and others.

Investment: The Sparkle Fund

The second pot, which I’ll call the “Sparkle Fund,” should be much bigger – but this time, I’m not talking about a gift. I’m talking about an investment that makes your industry’s stake in African peace real and irrefutable — something that demonstrates you have some personal interest in an end to war.

It is not a contribution to corrupt officials’ pockets. It doesn’t build the roads and other infrastructure that rightly are the responsibility of governments.

Instead, it is an investment directly in the poor who make up the overwhelming number of these country’s citizens – through micro-credit. This is one of development’s newest tools – and one of the most successful. Seed money is loaned to buy a few goats to start a herd; or a sewing machine to produce enough clothes to sell; or a cell phone an entire village will pay small sums to use.

The first loan is often $20 to $30, and it is repaid weekly. Subsequent loans increase to an average, in Africa, of less than $130. Repayment rates often top 98 percent. The money helps borrowers escape their hand-to-mouth existence. Within two years, most have a small cushion of savings — and have put the family’s children in school. Many of these micro-enterprises grow into small-business networks that help members of the extended family pull themselves out of poverty. And its multiplier effect benefits the entire community.

The money is just part of what the borrower gets. She – and it is usually a woman, because women tend to be the laborers in developing countries, as well as their family’s care-givers. She gets technical assistance that often is her only education. She gets the fellowship and encouragement of fellow borrowers. And she gets the stature and say-so that come with being the family’s breadwinner.

Increasingly, these savings clubs are a target for African organizations trying to fight AIDS – because they provide an opportunity to reach a motivated crowd. Often, club members are caring for at least one of the 13 million AIDS orphans now living. By 2010, that number is expected to grow to 21 million children — and another million children a year will lose their teacher to AIDS by then.

For the diamond industry, there may be one more reason to invest in micro-credit. A significant sum would demonstrate the stake you have in peace in Africa and your self-interest in recovering your principle one day — because these small loans won’t get repaid if war resumes and the goats are killed. It is donors’ loss if rebels burn a small restaurant to the ground. A borrower who has been turned into a refugee by fighting would leave her sewing machine behind – and with it, the opportunity to finish making the

payments on it.

This fund becomes even more important when you consider that very few Africans have ever seen the diamonds that are behind their suffering. As a missionary explained it, most Africans see your industry as, quote, “all for the white man.” These resources belong to all the nation’s people; a loan from the “Sparkle Fund” will be as much as most of them see of the diamonds.

Funding Level for Sparkle Fund

So what is “a significant sum?” It’s worth considering that much of this money probably would otherwise go to public relations budgets. I would submit that micro-credit would be a far more lasting investment than paying for the hordes of advertising and P-R teams that are beginning to work on the industry’s image.

And the benefit is not merely that the money would go directly to Africans. Micro-credit snowballs financially, as well as in their positive effect on communities. High repayment rates make these funds revolve; and companies regularly take credit for twice their initial investment within the first year.

For example, after I fasted for 22 days to draw attention to the problem of hunger, the World Bank established a micro-credit fund that in six years already has grown to nearly 10 times its original size.

Now, for my number. The diamond industry routinely calls on young men to invest two months of their gross salary in an engagement ring. “Where else can two months salary last a lifetime?” the saying goes. Your argument is compelling, and it should guide your decision about endowing a micro-credit fund.

17 percent of $6 billion (the equivalent of two months of African diamond exports) would yield just over $1 billion.

So what share of that are you able to loan to this fund? If it’s good enough for young men to invest two months of his salary in a diamond, it ought to good enough for the diamond industry to invest an equivalent share of its industry in Africans.

Again, I am not suggesting you make a gift at the same level you ask prospective grooms to make. This money would be repaid.

If 30 percent of the Sparkle Fund went to the conflict zones that provide 30 percent of the profits, the people of Sierra Leone, Liberia, the DRC and Angola probably could work their way out of misery with little additional help. And the remainder could do a great deal of good in the AIDS-wracked nations of southern Africa, and by right should be invested there.

A fund like this would re-orient the industry to acknowledge its rightful link to Africa and its people. And, at a respectable level, the fund – and the industry — really would sparkle!

Help from Consumers

Let’s say you invest $500 million in seed money, by contributing $50 million a year to the fund for the next 10 years. I believe you could attract even more from concerned consumers – and maybe even give one of your fast-growing products a lasting boost.

As a member of the demographic group targeted the last time your industry tried to make lemonade out of lemons (when you persuaded my wife and all her friends that they deserved an “eternity ring”), I am confident that you could do it again.

This time, you could market something like a “hope” diamond – a pendant whose proceeds went directly to the Sparkle Fund and gave millions of Africans real hope. Not only could such a product multiply the fund’s size; it almost certainly would create a lasting demand for pendants that outlives the ad campaign promoting it.

This may not be the ideal product, but something like it could affirm your acknowledgment of the industry’s stake in Africa. And it would signal that the industry has abandoned the disturbing attitude reflected in the words of one industry representative: “The last thing you want your customers to think about when they enter the jewelry store is Africa.”

Conclusion

In closing, I want to say that eight months ago, I made trips to New York and London to make the case for doing then what I hope you will do in the coming days.

A great deal has happened since then – most of it harmful to the legitimate trade in diamonds. I am very glad to hearing increasing willingness to comply with a system for barring conflict diamonds from the legitimate trade. But much, much more must be done.

I want to be absolutely clear on this. I am here for one reason: to encourage you to take the steps needed to make a certification system viable – and to express my strong conviction that your industry needs to rethink your financial responsibility to Africans. Many of them are hurting badly, and need some help.

I appreciate your letting me speak candidly. I stand ready to help you meet the challenge before you. And I wish you the best in any honest efforts you make toward these goals.

Thank you.

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